Share tips: A good time to snap up this IT provider

A profits hiccup has sent the share price of this tech stock reeling. But with a bulging order book, this firm still has plenty going for it, says Paul Hill.

Between 2007 and 2011, Computacenter, Britain's largest IT services provider, saw profits grow by an average of 19% a year and dividends by 17% a year. Yet its shares have been hammered over the past three months, following news that the firm will incur extra costs in order to support five big new contracts. I think this plunge is an overreaction.

Firstly, Computacenter has evolved from being a simple equipment provider to becoming a provider of more elaborate services. These include updating software, providing helpdesk facilities, maintaining equipment and other IT support. This unit now accounts for 30% of revenues. If you strip out pass-through' revenues from hardware sales (whereby Computacenter buys equipment on the behalf of clients without profiting from the deal), then this figure climbs to more than 75%.

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Paul gained a degree in electrical engineering and went on to qualify as a chartered management accountant. He has extensive corporate finance and investment experience and is a member of the Securities Institute.

Over the past 16 years Paul has held top-level financial management and M&A roles for blue-chip companies such as O2, GKN and Unilever. He is now director of his own capital investment and consultancy firm, PMH Capital Limited.

Paul is an expert at analysing companies in new, fast-growing markets, and is an extremely shrewd stock-picker.